Orleans official to plead guilty in Katrina fraud

By Michael Kunzelman
Associated Press

Published: Wednesday, July 18 2012 12:00 a.m. MDT

NEW ORLEANS — A New Orleans city councilman said Wednesday he would plead guilty to a federal criminal charge of misusing federal money intended to help a nonprofit organization after Hurricane Katrina and diverting some of it to one of his political campaigns.

Jon Johnson, 63, also plans to resign from his seat on the council, he said in a statement given to reporters by his lawyer just before court proceedings began in the case Wednesday.

He said he made the decision after meeting with federal officials about his use of Federal Emergency Management Agency money sent to the nonprofit he led, as well as information he provided the Small Business Administration about work on his personal residence.

"While they acknowledged the positive contributions which I had made, they were able to show me documentation where on two occasions, I converted federal FEMA funds totaling $13,000 to use in my 2007 Senate campaign and where I had filed a false statement in connection with an SBA loan which I was seeking," he said in the statement. "I acknowledged that I was, in fact, guilty of those offenses and accordingly agreed to enter a plea and to resign my position as a city councilman."

The statement came moments after a court filing showed that he had been charged with conspiracy to commit theft of government funds and to submit false documents.

Johnson is accused of diverting money intended for the Ninth Ward Housing Development Corp.

An eight-page bill of information made public Wednesday details Johnson's control of the nonprofit's finances as well as those of New Orleans Health Corp., another nonprofit he helped run. The bill said Johnson directed federal money to pay campaign expenses that was meant to help gut a storm-damaged building that Ninth Ward Housing owned. It also says he had Ninth Ward Housing direct federal money to New Orleans Health Corp. — money he also used for campaign expenses in an unsuccessful run for the state Senate in 2007.

In addition, the bill says, Johnson gave representatives of the Small Business Administration phony contracts that included false information about how much he had spent in repairing his personal residence — money he had borrowed from the SBA and which he had to account for.

Johnson has been a familiar face in New Orleans politics for more than three decades.

He was elected to the state House of Representatives in 1980 and moved on to the state Senate in 1985, the first African-American to represent state Senate District 2.

He was re-elected in 1987, 1991, 1995 and 1999. He was defeated by Ann Duplessis in a 2003 runoff and lost again to Duplessis in the 2007 campaign.